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This is why Amazon won’t accept Visa credit cards from January

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If you have an Amazon account in the UK, it is very likely that you received an email from the company today saying that it will not accept Visa credit cards from January 2022.

There is some confusion and misreporting about what Amazon is doing so I thought it was worth running over.

The key thing to understand is that this is a one-off dispute. For very specific reasons, it is not the start of a war between large retailers and the credit card companies.

Both Amazon and Visa have not been entirely truthful when they told the media that this is not about Brexit, because it absolutely is.

Here is wording from the email sent by Amazon:

“Starting 19 January, 2022, we will unfortunately no longer accept Visa credit cards issued in the UK, due to the high fees Visa charges for processing credit card transactions. You can still use debit cards (including Visa debit cards) and non-Visa credit cards like Mastercard, Amex, and Eurocard to make purchases. Please update your default payment method now, or add one of these new, eligible payment methods if you do not have one.”

What has happened to credit card fees charged to retailers post-Brexit?

Post Brexit, credit card fees have not changed for 99.9% of transactions:

  • a purchase from a UK retailer incurs an interchange fee of 0.3%, which is the same as it did whilst we were still part of the EU – this is because the EU legislation on interchange fees was incorporated into UK law, along with all other EU legislation
  • a purchase you make outside the EU in-person is not covered by any interchange capping legislation (subject to local rules) but this was also the case pre-Brexit

Once we left the EU, however, there was one loophole for Visa and Mastercard to exploit.

The EU rules only applied to IN-PERSON transactions. EU legislation does not cap interchange fees for online transactions, and UK legislation only covers transactions (online or in person) between two UK companies.

Card fees on purchases made by UK residents from EU companies ONLINE are not capped.

Unsurprisingly, both Visa and Mastercard announced substantial (500%) increases in interchange fees for online transactions that you make in the EU.

The fee on credit card payments rose from 0.3% to 1.5% and the fee on debit card payments increased from 0.2% to 1.15%.

In theory this isn’t a big deal ….

On the face of it, this should be a niche problem.

How much do you buy online from companies in the EU for delivery to the UK? Probably not much, if anything.

However ….

If you buy something from Amazon UK, you are actually buying something from Amazon Europe Core SARL or a related company. This is based at 38 avenue John F. Kennedy, L-1855 Luxembourg.

If you have a credit card which gives bonus points for overseas purchases, you may have received bonus points on your Amazon spending in the past – even though you were charged in Sterling and the goods were delivered from the UK. This is because the payment was processed in Luxembourg.

Visa is presumably treating purchases made at Amazon UK as if they were online transactions made in the EU. The interchange fee would therefore be 1.5% instead of 0.3%.

Why isn’t Mastercard impacted?

There appear to be two options:

  • Mastercard has reached an agreement with Amazon over fees, or

American Express is not part of this fight because it has not attempted to increase fee for UK customers making online EU transactions.

I like my Visa card. Is there a workaround for this?

Yes.

If you get a free Curve card – which is a Mastercard – you could use it to make your Amazon purchases from January 2022.

Curve recharges your purchases to another linked Visa or Mastercard. Link your existing Visa card to it and you’re sorted – Amazon charges will continue to pass through to it, via Curve.

You can apply for a free Curve card here. You will get £10 for signing up if you use our link.

You can also, of course, buy Amazon gift cards at other retailers with your Visa card and add them to your Amazon account.

Will Visa and Amazon reach an agreement?

It’s possible, of course, although the damage may have been done following the email today.

If customers swap to a Visa debit card – which is likely if they have a debit card from the same bank that issues their Visa credit card – then the hurt to Visa is limited. If a customer chooses to drop their Visa credit card entirely and switch to a Mastercard credit card, the damage could be far greater.

PS. Whilst writing this article, I noticed that Amazon is currently offering a £40 gift card if you sign up for the free Amazon Platinum Mastercard …..

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Comments (154)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • David says:
    17 Nov17 November 15:09

    Rob, Amazon Australia did this a few weeks ago. What was that about?

    “Beginning tomorrow, 1 November 2021, Amazon will apply a 0.5% surcharge to purchases made using Visa credit cards on Amazon.com.au, due to the costs associated with Visa transactions. You can avoid the surcharge by using any debit card, Zip, or any non-Visa credit card like a Mastercard, Amex, or UnionPay card.”

    • John says:
      17 Nov17 November 15:49

      Same thing – visa charges more for international purchases

      Some Australian cards even charge 3% fee on international purchases in AUD

      • Alex Sm says:
        18 Nov18 November 08:22

        But they didn’t have Australexit, so what’s the real reason? Just general audit of Amazon ops?

    • TGLoyalty says:
      17 Nov17 November 16:21

      Amazon can’t do that here because U.K. retailers can’t charge surcharges for a personal payment method (cash,credit,debit,visa,max,Amex etc must all be the same cost if accepted at all)

  • peter says:
    17 Nov17 November 15:15

    1.15% on Visa Debit that’s a lot too, but if Amazon dropped Visa entirely they would lose 40% of customers, so they just went for easy shaming email 🙂
    Anyway, you can always go to supermarket and buy Amazon gift card with Visa Credit..

    • Harrier25 says:
      17 Nov17 November 17:53

      I think Visa would more likely lose 40% of customers because those 40% are much more likely to replace the stored Visa card on their Amazon account with a MasterCard or Amex.

  • Hulk says:
    17 Nov17 November 15:26

    How do I get the £20 for changing card if I have not received the email from Amazon (probably because I have many non-Visa cards already registered with Amazon)

    • Rui N. says:
      17 Nov17 November 15:58

      Yeah, I’d like that link, as I didn’t receive any emails from Amazon. But I don’t have any Visa’s in my account, so probably that’s why.

    • Rob says:
      17 Nov17 November 16:07

      You don’t.

      I suppose you could delete all payment options except Visa credit cards and see if they do another sweep before January.

      • Harrier25 says:
        17 Nov17 November 18:04

        I only had two Amex cards stored on Amazon, so have deleted them both and replaced them with my Hilton Honors Visa credit card, in the hope I received an email with a link to add back my Amex cards for £20!🤞

  • Char Char says:
    17 Nov17 November 15:46

    They are paying people up to £20 to add an alternative card so I think they are serious about cancelling Visa off

  • Andrew P says:
    17 Nov17 November 16:40

    It seems hard to believe visa are charging more than Amex. Gift cards have got to cost them more and also do they accept PayPal? If so then PayPal linked to a visa a credit card would work.

    • the_real_a says:
      17 Nov17 November 16:51

      In retailers i`ve worked with gift cards are almost always considered a separate revenue channel, almost on a marginal cost plus basis.

    • Nick says:
      17 Nov17 November 17:04

      I can well believe that cross-border Visa costs more than Amex in UK/EU. 1.5% interchange plus visa scheme fees plus acquirer fees most likely does push them over the line in total cost. Remember Amex doesn’t have cross-border fees except in the US.

    • Blenz101 says:
      17 Nov17 November 17:48

      As per the article Amex haven’t increased their charges post Brexit and are in bed with Amazon both issuing cards and redeeming MR points.

      Wouldn’t be surprised if they have a global agreement.

    • Scott says:
      17 Nov17 November 18:13

      Re Paypal – No, amazon don’t accept this.

  • HertsSam says:
    17 Nov17 November 16:43

    Newbie here. Out of curiosity, I saw the suggestion to use a Curve card. As I understand it, that is treated as a debit card transaction. Does that mean any purchases don’t have the statutory S75 protection? Probably not required with Amazon, but thought I would ask.

    • Rob says:
      17 Nov17 November 19:06

      Correct, although Mastercard has a voluntary scheme for companies like Curve which is roughly the same, albeit not legally enforceable.

  • Redeyedonkey says:
    17 Nov17 November 17:16

    I think it’s irresponsible to promote curve as an option given its already led to cancelled cards for people simply for connecting their cards to curve. Sure it’s a no one off for now but curve is a poisoned chalice.

    • Hulk says:
      17 Nov17 November 19:17

      It’s irresponsible to claim that people have had their cards cancelled for simply connecting their cards to Curve.

      • Chrisasaurus says:
        17 Nov17 November 20:08

        Those were Robs words…

      • K23 says:
        17 Nov17 November 20:18

        That was indeed the case for myself and my OH

        • Rob says:
          17 Nov17 November 20:40

          We’ve also had readers where one has kept their card (never having done a single Revolut / Creation transaction) and the other who has been doing MS has had it closed.

      • Chris K says:
        17 Nov17 November 20:31

        It’s irresponsible to state things as unambiguous fact when there have been countless reports to the contrary over the past 6 weeks.

        (Am I doing this internet thing properly?)

      • bigdave says:
        18 Nov18 November 07:53

        Had Curve for years and never had an issue, then again I use curve mostly to not carry so many cards around, managing my elderly parents accounts’ cards, business cards etc. all in one place. Churning points now and again rather than it being a thing I have to do.

    • Yorkieflyer says:
      17 Nov17 November 21:57

      Agreed risking any credit card you want to keep by using Curve is clearly risky given their clearly provocative policy of encouraging users to circumvent credit card terms. Amex, Creation and National Saving have all said sod off

    • SteveJ says:
      18 Nov18 November 07:01

      I did have a chuckle at the irony of recommending Curve. If you value your relationship with your underlying card, don’t do it.

      • AndyS says:
        18 Nov18 November 07:55

        What is the risk here? I have curve and use for most purchases charging to mbna horizon or virgin MasterCard, go back in time quite often to extend the time to repay, and haven’t had any issues as yet. Should I stop using it?

        • Mikeact says:
          18 Nov18 November 08:40

          Agreed, never had a problem since day one. Personally, I never thought of abusing it as I never had a ‘problem ‘ underlying card unlike many on here.
          And I’ve used it…a lot. Just back from LaRochelle/I’ll de Re….again faultless.

          • Gavin says:
            18 Nov18 November 09:26

            I am sure the likes of Virgin Money and MBNA and others are watching the creation thing and deciding if the issue is big enough for them to do something.
            I think if someone as big as MBNA got heavy it would make headlines, so maybe they are treading carefully. These companies are not idiots they must know that the card is open to abuse.

          • Rui N. says:
            18 Nov18 November 10:43

            Virgin Money already acted a long time ago by limiting the amount of points earned in a month. This summer they also changed the T&Cs to allow them to treat (some) Curve transactions to be treated as cash advances. Not everyone is as incompetent as Creation.

  • James Harper says:
    17 Nov17 November 17:47

    My company uses the Capital on Tap Visa card for all purchasing which is much wider than Amazon.

    In this case the loser will be Amazon, not that they will care, but they don’t sell anything you can’t get elsewhere.

    • Czechoslovakia says:
      17 Nov17 November 18:29

      +1

    • CarpalTravel says:
      18 Nov18 November 06:47

      It’s just too easy to get lazy and go to Amazon by default. I say this as a person guilty of it.

      I was looking at a printer and ink cartridges last week and by chance found the printer £40 cheaper at eBuyer and the cartridges 45% cheaper at another company. Still got next day delivery too and this was buying at 8.50pm.

      • CarpalTravel says:
        18 Nov18 November 06:48

        Just to add – Amazon cares enough to offer a £20 incentive. A business like Apple certainly wouldn’t.

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